South America Tops A.T. Kearney Global Retail Development Index -- Brazil (#1),
Chile (#2), and Uruguay (#3)
Namibia (#26) and Botswana (#20) Rankings Signal Africa Growth
Potential; Although Long-Term Fundamentals Are Strong, India Drops 9
Positions
CHICAGO, IL -- (Marketwired) -- 06/12/13 -- South and Latin America
are significant growth markets for retailers with seven countries
(Brazil, Chile, Uruguay, Peru, Panama, Colombia and Mexico) ranked in
the 2013 A.T. Kearney Global Retail Development Index(TM) (GRDI).
Sub-Saharan Africa continues to build momentum, with Botswana and
Namibia in the rankings and a few other nations ranked just outside
the top 30. Africa is a dramatic retail opportunity if business and
political risk can be managed.
A number of small countries with unique characteristics of wealth and
consumer focus including Uruguay (3rd) Mongolia (7th), Georgia (8th),
and Armenia (10th) are ranked in the GRDI. For luxury retailers,
these are new-found hubs. For general retailers, these countries can
be the beginning of a regional strategy.
Michael Moriarty, A.T. Kearney partner and study co-leader, said, "As
developed markets face flat or anemic growth, developing markets are
sources of important growth, and the GRDI helps our clients identify
when windows of opportunity for retail investment open up in some
country markets that are pretty hard to anticipate."
Published since 2002, the GRDI ranks the top 30 developing countries
for retail investment worldwide (see figure).The Index analyzes 25
macroeconomic and retail-specific variables to help retailers devise
successful global strategies and to identify emerging market
investment opportunities.
Althea Peng, A.T. Kearney partner and study co-leader, noted,
"Shopping centers and malls are driving much of the progress in
organized retail in developing countries, as they solve regulatory
and real estate issues for many retailers. The Village Mall in Rio de
Janeiro and JK Iguatemi in Sao Paulo, and Chile's Costanera Center
Mall have served as platforms for the launch and expansion of
international brands in Latin America."
GRDI Results
Brazil tops the GRDI for the third consecutive year. Despite a
slowdown in GDP growth (1 percent in 2012), retail spending remains
stro
ng and is expected to rise 11 percent in 2013 thanks to continued
expansion investments, organic growth, infrastructure improvements in
advance of the 2014 FIFA World Cup and the 2016 Olympics, and a rise
in consumer confidence. Rising employment raters and increased credit
access for Brazil's large and growing middle class are proving
attractive to retailers.
Luxury retailers continue to flood into Brazil. Luxury malls, such as
JK Iguatemi in Sao Paulo and Village Mall in Rio de Janeiro, have
served as the platform for the launch of several international brands
in Brazil, including Valentino, Miuccia Prada, Miu Miu, Goyard,
Sephora, Gucci Lanvin, Van Cleef & Arples, Bare Minerals, Topshop,
Dolce & Gabbana, and Nicole Miller.
Mexico (21st) moved up seven spots in the GRDI behind renewed
optimism about the economic and political environment. Per capita
spending grew 5.3 percent year-over-year, boosted by increased
consumer confidence, a stronger peso, lower interest rates that led
to more credit availability, and moderate inflation. Mexican retail
sales were $211 billion in 2012 -- half through traditional channels
such as mom-and-pop stores. Wal-Mart Soriana, Comercial Mexicana, and
OXXO account for roughly 60 percent of the modern retail market and
each has plans to expand. Modern retail is heavily concentrated in
Mexico's largest cities, so mid-sized cities offer a prime
opportunity for expansion. E-commerce sales, while still a small
portion of the retail market, grew 23 percent in 2012 to reach $3
billion.
China (4th) falls one spot in the rankings, but its retail market
remains impossible to ignore for global retailers: double-digit sales
growth, rising consumer demand, and a dynamic retail environment.
Shopping malls are growing more popular as more shopping and
entertainment alternatives are added to the mix. The number of
shopping malls in China has reached 3,100 with 288 new malls added in
2012, most in tier 2 and 3 cities.
China's luxury segment has suffered recently. More luxury goods are
being purchased abroad, and tighter regulations on gifting have been
placed on government officials. Major luxury brands are re-thinking
their expansion plans in China. E-commerce is expanding rapidly,
representing as much as 10 percent of retailers revenues in some
categories. Total online sales reached $207 billion in 2012, and
robust growth is expected in the near future.
India #14 dropped nine places in the ranking. The global slowdown did
not spare India, whose GDP growth rate slipped to 5 to 6 percent.
Same-store sales volume growth slowed in 2012 across all retail
segments. High operating costs, low bargaining power with vendors,
and a need to discount heavily to improve sales have put pressure on
margins and, therefore, retailers' expansion plans. Real estate cost
and space availability have been important issues as well. Many
players are actively looking at improving sales productivity, cutting
operating costs, and reducing store size to improve profitability.
Despite these declines the long-term fundamentals for India remain
strong. A large population coupled with an increasingly brand- and
fashion-conscious population of young Indians, the retail sector
remains attractive. Retail growth of 14 to 15 percent per year is
expected through 2015.
Sub-Saharan Africa is emerging as a market for regional and global
wholesalers and retailers seeking high-growth opportunities. The
population is young (one-third is between 10 and 24 years old) and
fast growing (2.4 percent per year) and GDP is growing steadily as
well. The region has unique and challenging obstacles. The
infrastructure is largely underdeveloped, which makes building a
sustainable supply chain difficult. The region depends heavily on
agricultural products, and modern retail has made a dent in only a
few countries due to price-sensitive consumers and high inflation.
Botswana #25 and Namibia #26 are ranked in this year's GRDI, but the
region as a whole bears watching.
To read the full 2012 GRDI Report, please go to
www.grdi.atkearney.com.
2013 Global Retail Development Index Ranking
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Country 2013 Rank 2012 Rank Change
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Brazil 1 1 0
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Chile 2 2 0
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Uruguay 3 4 +1
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China 4 3 -1
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United Arab Emirates 5 7 +2
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Turkey 6 13 +7
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Mongolia 7 9 +2
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Georgia 8 6 -2
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Kuwait 9 12 +3
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Armenia 10 - N/A
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Kazakhstan 11 19 +8
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Peru 12 10 -7
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Malaysia 13 11 -2
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India 14 5 -9
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Sri Lanka 15 15 -
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Saudi Arabia 16 14 -2
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Oman 17 8 -9
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Colombia 18 23 +5
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Indonesia 19 16 -3
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Jordan 20 18 -2
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Mexico 21 28 +7
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Panama 22 24 +2
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Russia 23 26 +3
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Lebanon 24 22 -2
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Botswana 25 20 -5
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Namibia 26 - N/A
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Morocco 27 27 -
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Macedonia 28 21 -7
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Azerbaijan 29 17 -12
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Albania 30 25 -5
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